IBBI changes pre-pack insolvency valuation calculation
Pre-pack insolvency valuers must use asset-class liquidation estimates as the corporate debtor's liquidation value
IBBI
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Change
IBBI amended the Pre-Packaged Insolvency Resolution Process Regulations to prescribe how liquidation value and fair value are calculated for corporate debtors.
Why it matters
The amendment fixes the valuation basis for pre-pack insolvency processes. Registered valuers must submit liquidation-value estimates by asset class, and where two sets of valuers are appointed, coordinating valuers' fair-value estimates must be averaged.
Implications
- — Registered valuers in pre-pack insolvency processes must submit liquidation-value estimates by asset class because the aggregate of those estimates becomes the corporate debtor's liquidation value.
- — Coordinating valuers appointed under regulation 38 must calculate fair value using the average of the two fair-value estimates submitted by the coordinating valuers.
- — Insolvency professionals preparing pre-pack documents must use the prescribed liquidation-value and fair-value figures in filings and process records.
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